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Bitcoin is testing the bottom of its descending channel seen in the 4-hour time frame and seems to be due to the rebound. However, this could only stimulate a correction of the area of interest that aligns with the upper channel around $ 6,200.
The application of the Fibonacci retracement tool shows that the 61.8% level is the closest to this resistance, which is also close to the dynamic resistance to moving averages. The 100 SMA is below the 200 long-term SMA to signal that the path of least resistance is towards the negative side or that the selloff is more likely to resume than to reverse. Furthermore, the gap between moving averages is widening to signal the strengthening of sales pressure.
It is also worth pointing out that the current consolidation looks like a bearish flag, which is considered a sign of continuation. A break below the peak below the $ 5,200 area may be enough to confirm that another lower leg is being worked, probably the same height as the flag shaft.
Stochastic is pointing down to confirm that the sellers are returning. The oscillator seems ready to turn lower without even hitting the overbought area, indicating that the bears are eager to return.
The cryptocurrencies had a bad period last week, as the prevailing uncertainty on the Bitcoin Cash swingarm has spread to the entire sector. After all, investors were reminded that at some point similar problems could arise for other altcoins, with potentially greater potential losses in value.
Some say the recent slide puts the bitcoins off the track for a rebound this year, as it may take months to unwind from such losses. However, a handful of analysts are keeping positive forecasts as dips are opportunities for more buyers to rush. In addition, institutional investments should flow at the start of next year and most market participants would not want to be left behind.
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